(May 2, 2005) A California Chamber-opposed bill to give California the highest minimum wage in the country passed the Assembly Labor and Employment Committee on a party-line vote of 6-2.

”This proposal to make California home to the highest minimum wage in the country will be a burden on employers of all sizes, which are already shouldering the heavy burdens of paying the nation’s highest energy costs as well as the nation’s highest unemployment insurance tax rates,” said Julianne Broyles, Chamber director of employee relations and small business. “An increase to the minimum wage would be yet another cost driver forcing more employers out of the state or causing them to simply close their doors and provides a disincentive for employers to locate or expand here.”

AB 48 (Lieber; D-Mountain View) increases the state minimum wage from the current $6.75 per hour to $7.25 in 2006 and to $7.75 in 2007, costing employers at least $2.08 billion annually, raising costs to consumers and driving employers to other states.

AB 48’s initial mandated 50-cent-per-hour wage increase would increase the base payroll costs for a small business with 20 workers by at least $20,000 per year.  The second tier increase on July 1, 2007 would increase that business’s costs by at least $41,600.

Employers’ costs - such as workers’ compensation, health care premiums and other employment-related taxes - all increase when payroll costs rise. According to the Workers’ Compensation Insurance Rating Bureau, enactment of AB 48 would cause workers’ compensation costs to rise by an additional $20 million annually.

The Chamber believes that rather than mandating a wage increase, the focus should be on removing barriers to productivity and wage growth that government has imposed on the private sector.

Key Vote
The Assembly Labor and Employment vote 6-2 vote on April 20 was as follows:

Ayes: Chan (D-Oakland), Chu (D-Monterey Park), Klehs (D-Castro Valley), Koretz (D-West Hollywood), Laird (D-Santa Cruz), Leno (D-San Francisco).

Noes: Houston (R-Livermore) and Nakanishi (R-Lodi).

AB 48 will be considered next by the Assembly Appropriations Committee.